Australian car manufacturers say an American decision to have their new vehicles able to run on biofuels will push up costs for Australian car exporters.
America's biggest car companies have announced that almost half of their new cars will be able to run on 85 per cent ethanol in five years.
It follows a plan by US President George W Bush to reduce petrol consumption by 20 per cent over the next decade.
Chamber of Automotive Industries chief executive Peter Sturrock predicts the ethanol decision will add thousands of dollars on the costs of vehicles sold overseas.
"That change is unfortunate in the sense that it will require additional cost and some unique production arrangements in Australia and that being the case, it will add some complexity in cost," Mr Sturrock said.
"However, if that decision has been taken, I would imagine it would in fact impact on vehicles being exported to the US in the next few years."
Mr Sturrock says it is too early to say how much extra it will cost manufacturers to make cars for the US.
"I imagine it will run into some hundreds of dollars, maybe into the thousands of dollars per vehicle to be modified for the US specifications but we would have to study that more closely," he said.
'Few benefits'
He argues the environmental benefits from switching from a non-renewable to renewable fuels are almost negligible.
"In the first instance, the science reflects that it may be marginally beneficial but we have to remember that to produce ethanol in the first instance, there is a process required to take the product from grain or sugar cane and that itself uses a good deal of energy," he said.
"So we need to just examine the whole picture in terms of the energy consumption requirements to go from grain crops to ethanol to put into fuel to be put into vehicles."
Greenpeace energy adviser Paul Cleary agrees that ethanol, which is made from corn, is not a greener choice.
"At the moment, to produce ethanol, it requires a huge amount of energy in the growing of the crops and most importantly, in the electricity that's used in manufacturing it," he said.
"Most of that electricity in Australia, 88 per cent in fact, comes from coal-fired power stations."
Ethanol is a hot-button issue in America's mid-west, which produces almost half the world's corn.
The flashy Indy race cars, with their screaming V8 engines, have become unlikely pin-ups for the car makers' decision.
The IndyCar Series is set to become the first in motor sport to use a renewable fuel source. IndyCars will run on 100 per cent ethanol this season.
